Quarterly home-loan production increased at Flagstar Bancorp Inc. and more than doubled from a year ago. Rate lock commitments point to continued improvement during the current quarter. While the bank returned to profitability following a string of quarterly losses, repurchase activity deteriorated.
The Troy, Mich.-based company closed $12.547 billion in residential mortgages during the second quarter, according to earnings data released this week.
Business improved from $11.169 billion in originations during the first quarter.
Originations more than doubled from the same three-month period in 2011, when volume totaled just $4.643 billion.
First mortgage lock commitments were $17.5 billion, climbing from $14.9 billion in the first quarter.
Second quarter originations included $9.223 billion in refinances, up from $8.981 billion three months earlier. Purchase production grew to $3.325 billion from $2.189 billion.
Flagstar increased its third-party mortgage servicing portfolio to $76.192 billion from $68.208 billion as of March 31. The portfolio growth was even significant compared to the second quarter of last year, when it stood at $57.088 billion.
Assets included $3.102 billion in residential first mortgages, down from $3.305 billion at the end of the first quarter and $3.745 billion as of the same date in 2011.
Second-mortgage holdings were reduced to $0.127 billion from $0.132 billion three months earlier and $0.156 billion a year earlier. Home-equity lines-of-credit on the books were trimmed to $0.198 billion from $0.209 billion and totaled $0.241 billion a year prior.
Flagstar increased its warehouse lending assets to $1.261 billion from $1.104 billion. As of June 30, 2011, warehouse outstandings were only $0.514 billion.
Commercial real estate loans on the balance sheet were cut to $1.075 billion from $1.158 billion. CRE loans amounted to $1.111 billion in the same period last year.
The company was hit with $344 million in repurchase demands during the second quarter, more than $239 million in the first quarter and $194 million in the same quarter last year. The 2007 vintage accounted for $136 million of the latest period’s demands. Most of the demands were from Fannie Mae.
As of June 30, $479 million in pending demands were outstanding.
The reserve for representation and warranty was raised to $161 million from $142 million in the first quarter. The reserve was $79 million in the year-earlier period.
Repurchase charge-offs fell to $34 million from the first quarter’s $44 million.
Second-quarter earnings before taxes of $88 million swung from a $7 million loss three months earlier and a $70 million loss a year earlier.
“Returning to profitability following an extended period of losses marks a major milestone for our bank,” Flagstar Chairman, President and Chief Executive Officer Joseph P. Campanelli said in the report.
Mortgage staffing included 336 loan officers and account executives, increasing from 311 at the end of March and 316 as of June 30, 2011.
Company-wide headcount, including mortgage sales employees, expanded to 3,520 from 3,281 and also grew from second-quarter 2011 headcount of 3,306.
Flagstar operated 30 home loan centers in 13 states as of June 30, adding two since the end of the first quarter but unchanged from a year prior.
As of month-end June, 111 bank branches were operating — all in Michigan. Branch count slipped from 113 in the previous quarter.
